Has job creation been accompanied by job quality in Turkey?

Submitted by Ximena Del Carpio
On Mon, 01/08/2018

Also available in: Türkçe

It is often said that job creation in growing economies sacrifices quality for quantity. Skeptics argue that job growth occurs in low-wage occupations and low-productivity sectors, are temporary in nature, and offer precarious conditions.

Such criticism was made in Turkey after the global crisis, when the country experienced rapid job creation and decreasing unemployment - from 12.58% at the peak of the crisis to 8.17% in 2012.

As unemployment began to rise, the Turkish government put forward a comprehensive plan of incentives to catalyze job creation. But, while more jobs are being created in the formal economy today, a common perception persists that these are mostly poor-quality jobs.

To address these concerns, the World Bank and the government of Turkey have created a tool - a Job Quality Index (JQI) - that measures the quality of jobs in Turkey[1] and tracks how job quality has evolved over time. This index will be publicly available in 2018, but we will share some findings now.

The JQI - which consists of 6 dimensions and 13 measurable components - offers several comparative advantages over existing measures. First, the data is collected annually, which allows for regular monitoring. Second, an estimation can be done for different types of workers at both the national and sub-national levels. Third, as the estimates are based on micro data, each worker gets a score and results can be correlated with socio-demographic characteristics and job-related factors (industry, occupation, and public or private sector employment).

Finally, the index presents an interactive policy tool that can be adjusted, either through the definition of components or alternative weighting schemes, to incorporate emerging policy priorities.

Results show that aggregate job quality for wage workers in Turkey has, indeed, improved over time. This indicates that, on average, the jobs that have been created in Turkey over the last seven years have been improving in quality - with the average job-quality score going from 0.70 in 2009 to 0.75 in 2016.

The tool also measures job quality for all workers - including self-employment and unpaid workers (who account for 20% of the workforce) - to get a more realistic picture of the quality of all jobs in Turkey.

Not surprisingly, the results for the full labor force are significantly lower than when restricted to just wage workers. In 2009, the median score was 0.27, a very low score by any standard; fortunately, jobs for this group improved over time - to 0.43 in 2016.

All of this is good news for policymakers interested in promoting more labor market flexibility that also offers worker protection.

Apart from meaningful improvements in the actual score of wage workers, there were improvements in terms of inequality following the global crisis - meaning that workers with the lowest scores (often the most vulnerable wage workers) improved between 2011 and 2013. Unfortunately, this positive trend has partially reversed in recent years - indicating a widening of scores.

It is also important, however, to move away from averages and inspect the scores of workers across the full distribution. Doing so is especially important in countries with diverse geographic concentrations of wage employment, and distinct labor markets - informal, formal temporary and formal permanent (Figure 1b).

Source: authors’ calculations based on LFS data

As shown in Figure 1a, most wage workers have jobs that offer many quality features. We must note, however, that there is a long left tail in the distribution - indicating that there is a non-negligible number of workers with very low-quality jobs, whose conditions may have even deteriorated over time and for whom targeted interventions and policy change can make a big difference.

Wage workers in the formal and informal labor markets face very different work situations. The JQI shows a score of 0.85 for formal jobs in 2016 and a score of just 0.31 for informal jobs. But there is a third group of workers who work in formal temporary jobs. These scored 0.72 in 2016. However, it is important to note that the distribution of scores of these workers is wide, indicating that the quality of these jobs varies widely.

The drivers of change also differ widely when the analysis delves deep into distinct sub-groups of workers. For example, young workers, irrespective of their job, seem to have better training opportunities than others. At the same time, they are disproportionately affected by non-compliance with minimum wage legislation and are more likely to be underpaid. On the other hand, prime age workers (aged 25-49) are more likely to be underemployed in permanent jobs and overqualified in temporary employment.

There are also gender differences. Men are better off in wage-related components - such as relative underpayment and moonlighting - and are also less affected by skills obsolescence than women. Women, on the other hand, are more likely to receive training and work in jobs that are relatively resilient to aggregate shocks. Women are less often overqualified or underemployed and work in sectors with better work safety and less child labor. Notably, there are no significant gender differences in minimum wage compliance for formal wage workers.

Key message and next steps

So, then, have the recent jobs created in Turkey been quality jobs?

For the most part, the answer is yes.

However, we still need to identify those being left behind and figure out why the quality of their jobs remains low, to ensure that all Turkish workers benefit from incentives and economic progress.

This exercise shows that job quality is a measurable concept that can be used by policymakers verify job growth is accompanied by job quality. We encourage the government of Turkey (and other countries) to use this tool to identify which aspects of various jobs could benefit from financial incentives and which policy measures should be emphasized in order to create not just jobs – but good jobs!